Mohali, February 8
The real estate bubble of Mohali burst today. Well almost. In what proved to be the biggest let-down for the Greater Mohali Area Development Authority (GMADA), 9.6 acres of its prime land had to be doled out at a
“historic” auction to the sole bidder Life Insurance Corporation (LIC) for a measly Rs 25 per square yard over and above the reserve price of Rs 464 crore.
The company offered to pay
Re 1 per square yard over the reserve price of Rs 1 lakh per square yard when it was pointed out that the minimum bid amount could only be a multiple of Rs 25. GMADA fetched Rs 464.75 crore for the site, Rs 12 lakh more than the reserve price.
The presence of the LIC proved to be GMADA’s fig leaf when even after a three-hour wait, the insurance company remained the only one to have deposited the 1 per cent of the reserve price to bid at the auction.
Representatives of major private players, including Reliance, Taneja Developers and Ansals which had been showing great interest in the site till yesterday, remained mute spectators at the auction.
Secretary urban housing and development Arun Goel, however, chose to highlight the silver lining. “This is the biggest auction amount ever earned in the region. Punjab is now established as the real estate destination in this part of the country. We have shouldered out Haryana where a hotel site in Panchkula could not attract even a single bidder,” he said.
Other officials who did not want to be named, however, said that the outcome of the auction was “most shocking”. “The private players have ditched us,” said another official.
Real estate market analysts assessed the unusual turn of events as a possible strategy of real estate developers to try and ensure that the auction fizzled out. “In that case, the reserve amount would have been reduced and
auction held again. This is what happened in Panchkula. Till yesterday, everyone was showing interest and today each waited for the other to make the first move. The fact that giants were showing so much interest would have kept many other medium-sized genuine buyers at bay. The fact that the LIC came and was ready to buy the site went in the LIC’s favour,” said Amarjit Singh Sethi.
Some of the private players who were at the auction pointed out that the site was too expensive and not all that good as had been projected by GMADA.
Whatever the reason for the auction’s fiasco, today Mohali has been pushed back many notches as a “hot” real estate investment destination. The auction of urban property in Amritsar and Ludhiana had fetched the local area development authorities better per
square yard rates.
